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Signs point to reawakening housing market

Historically low interest rates and dropping home prices make for a buyer’s market

by Caitlin AdamsPublished: March 15, 2012 03:05 PM

DataQuick, a real estate and housing industry information and analytics firm, has released its February report on home sales in the Southern California region. Recent activity points to certain coming growth in the housing market, following months of falling home prices and interest rates dipping lower.

This past month’s stats mark the highest number of home sales for the month of February over the past five years, due mainly high levels of investor activity and cash purchases at the $300,000-and-under level. Last month’s median home price for the region, $264,750, inched up very slightly from January 2012, an increase of 1.8 percent, but the year-over-year difference shows a decline from February 2011, falling 3.7 percent.

“February sales got a big boost from investors and others paying cash for relatively affordable homes, as well as from an extra day’s worth of sales thanks to the leap year,” said John Walsh, DataQuick’s president. He explained that the one extra day of selling made a big difference in accounting for the five-year high in February sales, but cautioned that January-February stats are not, in general, good for forecasting purposes. The big picture remains one in which the bottom of the housing market continues to see much of the action, while move-up activity remains sluggish. Financing is still difficult for many, and lots of potential move-up buyers and sellers are stuck because they owe more than their homes are worth.”

Overall, the SoCal market posted gains in the number of homes sold in February compared to the same time last year, rising 8.4 percent. However, those gains were scattered across the region. The DataQuick reporting area of Southern California is comprised of Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties. Among those, San Diego had the highest rate of increase in homes sold over February of last year, at 16.3 percent. Los Angeles came in second, with a gain of 11.1 percent. Orange County brought up the rear of the list. Only one more property was sold in February 2012 than the same month in 2011.

To some degree, the low level of home-buying activity in Orange County may be attributed to its relatively high home prices. Orange County maintains the highest median home price in the Southern California region, and while most home-selling activity has been observed in the under-$300,000 bracket, the local median home price far exceeds that level. Still, O.C.’s median home price did fall in February by 5.2 percent, to just over $388,000.